Investor Briefing

1
International PowerInterim Results
6 Months to 30 June 2003
2
David Crane
Chief Executive Officer
3
First half financial performance
Results in line with guidance but down
year-on-year as US and UK markets at bottom of
their price cycles
H1 03
H1 02
Change
EPS PBIT Free cash flow
5.1p 138m 45m
9.9p 229m 133m
-48 -40 -66
Free cash flow is defined as operating cash
flow, minus interest, tax and maintenance capex,
but before growth capex
4
Strategic highlights
Business model works as portfolio diversity
enables us not only to survive current trough in
US/UK merchant markets but also to enhance our
position for the future

• Acquired Umm Al Nar IWPP in UAE with 1.77bn
  financing and well positioned on further
  initiatives in the Middle East
• Monetised for value 5 of our stake in Hubco in
  Pakistan
• Issued a 252m convertible, on favourable terms,
  to replace, in part, existing convertible
• Achieved exclusivity on 4,000 MW Drax

5
Robust operational performance
Plant continue to perform well

• Plant continues to perform well
• 50 of assets have achieved less than 2
  unplanned outage losses
• 75 of assets have achieved less than 4
  unplanned outage losses
• EOP major structural repair work carried out to
  time and budget with no lost time accidents,
  whilst maintaining excellent plant performance
• Pego achieved sixth consecutive RoSPA gold award
  for occupational safety management
• Hubco - effective management of generator
  transformer manufacturing defect, minimising
  availability losses and future threats
• Kapco - completion of major unit overhauls using
  in-house personnel in the absence of OEM support

6
Merchant Markets Update
7
Geographic diversity
Asset spread smoothing cycles in merchant markets

• Cyclicality of pricing in merchant markets has up
  cycles as well as down cycles
• Price cycles in IPRs key markets not in sync
• Continued strength of Australian merchant
  portfolio, which remains substantially contracted
  over the next 1-2 years
• IPRs long term contracted assets portfolio
  provides a measure of steady cash flow as a
  foundation for the merchant business

8
US market - Texas
No signs of recovery yet, summer pricing remains
weak and fundamentals unchanged
ERCOT 2Q 03 and Summer Spark Spread History (7
Heat Rate)
/MWh
30
25
Aug
20
May
15
10
Jun
Apr
Jul
5
0
Jan
Feb
Mar
May
Jun
Jul
Aug
Apr

• Jul / Aug show large decrease to actuals from
  forwards
• Use of out of market energy and capacity
  depressed balancing and daily market prices

9
US market New England
No signs of recovery yet, summer pricing remains
weak and fundamentals unchanged
/MWh
NEPOOL 2Q 03 and Summer Spark Spread History (7
Heat Rate)
30
25
20
Jul
15
Aug
Apr
10
Jun
May
5
0
-5
-10
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug

• Jul / Aug show large decrease to actuals from
  forwards

10
US market
In both Ercot and Nepool a substantial portion of
the market remains in transition
New record peak on Aug-7-03 (60.2 Mw) was 4.5
higher than the old record (57.6 MW) set in
Aug-2000, as a result peak reserve margin is now
29
No.2 generator, Texas Genco, and No. 3 generator
AEP Texas, are both in transition. No. 1
generator TXU (19.9 GW) continues to operate 9.1
GW which are gt 30 years old, and 2.7 GW which are
gt 40 years old
Mirant, NEG and NRG bankruptcies, and Exelons
withdrawal from Exelon Boston Generation (2,400
MW of in-city capacity) brings the total NEPOOL
megawatts in Chapter 11/hand-back status to
12,538 MW (net), which is about 40 of the
regions 31 GW of installed generating capacity
11
Our approach to the US market
Short term outlook unchanged but longer term
opportunities remain

• Focus on asset management, plant synergies,
  flexible operations
• Seek opportunities, at the right price, to
  develop scale in our merchant markets
• Together with Keyspan, push forward Brookhaven
  and Spagnoli Road on Long Island as long-term
  contracted assets, contracted to retail load
  provider

12
European markets
Our current focus is on the UK market
Is the recent uptick in wholesale electricity
prices sustainable? (Is it enough?)
Historic baseload spark spreads based upon
day-ahead values. Forward spark spreads taken
from 28/08/03 forward curve. All spreads based
upon heat rate of 7194GJ/GWh (50 HHV
efficiency). New-Entrant spreads assumed at 90
load factor.
Too early to tell
13
European markets
Our current focus is on the UK market
Is the reserve margin really as tight as
suggested?
EW supply/demand balancewk 38 02 wk 38 03
50,000
Demand
36,000
02
03
12,000
Surplus
800
02
03
Source www.bmreports.com
Probably not, but trend is in the right direction
. . .
Note that prior to July 2003 NGC treated the
2000MW interconnector to France as a net import
of power within their calculations. NGC now
assume that the volume could vary across the year
(according to price differentials) and have
therefore set the link capacity to 0GW in its
calculations.
14
Why Drax?
Thermal Efficiency of Large Coal-fired Plant
(1992/93 to 1999/2000)
ThermalEfficiency (net)
39
38
37
36
35
34
33
32
0
10
30
40
50
60
70
80
90
100
20
Load Factor
Source IPR estimates
Aberthaw B
Didcot
Drax
Eggborough
Ironbridge
Rugeley B
West Burton
15
Australian market
Prices softened but forward contract position
robust
/MWh

• Highly contracted for 04 and moderately
  contracted for 05
• Market reflecting additional capacity already on
  line in Queensland

70
60
50
40
30
20
10
0
1996
1997
1998
1999
2000
2001
2002
2003
2nd Year Forward Price
1 yr Forward Price
Mov. Avg. Vic Spot Price
365 Day Mov. Avg. Vic Spot Price
16
Middle East - A new core region
17
Greater Middle East Region
Name
Country
MIGD
Fuel
IPR
MW
Operating

• PPA market
• Sovereign offtakers
• Power plus desalination
• Greenfield orientated
• High annual demand growth
• US based contracts

Gas Gas Oil Gas Gas Gas Gas
100 20 26 36 20 20 n/a
n/a 157 n/a n/a 100 25 n/a
285 805 1292 1600 1500 1550 1100
Al Kamil Umm Al Nar Hub Power Kot
Addu Shuweihat Umm Al Nar Aramco Cogen
Oman Abu Dhabi Pakistan Pakistan Abu Dhabi Abu
Dhabi Saudi Arabia
Construction
Advanced Development
18
Philip Cox
Chief Financial Officer
19
Profit and loss account
Six monthsended 30 June
Year ended31 Dec 2002
m
2003
2002
Turnover - gross PBIT Interest PBT Tax Minority
interests Profit after tax MIs Earnings per
share - basic
639 138 (50) 88 (28) (3) 57 5.1p
568 229 (67) 162 (48) (3) 111 9.9p
1,129 388 (132) 256 (77) (6) 173 15.5p
Interest cover
2.8x
3.4x
2.9x
Tax rate
32
30
30
Note all numbers are pre-exceptional
20
Exceptional items
Six months ended 30 June
m
2003
2002
Profit on sale of 5 Hubco shareholding Deeside
impairment Kapco dividend Pre-tax Tax on
exceptional items Post tax
8 - - 8 - 8
- (45) 24 (21) 6 (15)
Hub shares cash proceeds from sale Book
value of shares sold (5 shareholding) Profit
on sale Original shareholding Sold
Shareholding Impact on 2003 PBIT
21m (13)m 8m 25.7 (5.0) 20.7(3)m
21
Geographic analysisTurnover PBIT
Six months ended 30 June
Year ended31 Dec 2002
2003
2002
m
Turnover
PBIT
Turnover
PBIT
Turnover
PBIT

North America Europe Middle East Australia Rest
of World Regional total Corporate costs Total
224 229 116 70 639 - 639
1 49 55 46 151 (13) 138
315 440 226 148 1,129 - 1,129
99 109 101 108 417 (29) 388
130 242 110 86 568 - 568
59 77 49 56 241 (12) 229
Pre-exceptional items
22
Balance sheet
30 June2003
31 Dec2002
m
Fixed assets Intangibles tangibles
Investments Net current liabilities Provisions
and creditors gt 1 yr Net debt Net
assets Gearing Debt capitalisation Net debt
Cash liquid resources Recourse debt and
convertible bond Non-recourse debt Total net
debtOff balance sheet debt (JVs and associates)
2,562 500 3,062 (81) (278) (834) 1,869 45
31 859 (264)(1,429) (834)(536)
2,474 507 2,981 (138) (262) (812) 1,769
46 31 842 (268)(1,386) (812)(503)
23
Cash flow
Six months ended 30 June
Year ended31 Dec 2002
m
2003
2002
Operating profit (pre JVs associates) Impairmen
t Depreciation and amortisation Movement in
working capital provisions Dividends from JVs
associates Operating cash flow Capital
expenditure - maintenance Interest and
tax Exceptional items Free cash flowCapital
expenditure - growth Acquisitions
disposals Share buyback Foreign
exchange Other Movement in net debt Opening net
debt Closing net debt
51 - 51 54 (34) 60 131 (39) (47) - 45
(37) 21 (6)(35) (10) (22) (812) (834)
105 103 208 112 (44) 115 391 (48) (108) 17
252 (96) (144) - 85 (12) 85 (897) (812)
86 45 131 46 (35) 79 221 (29) (58) (1) 133
(60) (133) - 38 (2) (24) (897) (921)
24
Debt capital markets

• Debt Capital markets have improved
• New Convertible Bond successfully launched in
  July - closed in August Principal terms
• 252m (158m)
• 3.75 interest
• 50 conversion premium 2.00
• minimum 7 year term
• High Yield market is accessible if required at
  7.75 - 8.50 based on current market conditions
• Rugeley project debt restructured as planned in
  August
• 70m repaid by IPR
• 70m IPR Letter of Credit cancelled for FGD
• 20m IPR Letter of Credit (debt service)
• ANP (US) non recourse debt re-designated to long
  term following successful resolution of claimed
  events of default

25
Net debt structure - Group
JVs / Associatesnon-recourse-off balance sheet
IPRCorporate
m
Total
Subsidiaries
Maturity
(91)(39)- (214)(115)(77) (536)
859 (228)(36) (264) (615)(520)(160)(54)(53
)(27) (1,429) (834)
n/a 20032003 20062012/132008/current20072
017 2015
651 (228)(36) (264) - - - - -
- - 387
208 - - - (615)(520)(160)(54)(53)
(27) (1,429) (1,221)
Cash liquid resources Recourse debt
Convertible Bond NP Eurobonds Non recourse
debt US Australia UK Europe Middle
East RoW Total net debt
(assumed)
1
2
1
includes 36m current debt for working
capital reported as current debt at 30 June 2003
2
26
IPR - corporate pro-forma capital structure
Payment ofexistingbonds
Rugeleydebtrestructuring
PotentialANPdowngrade
30 June2003
Newconvertible
Revisedpro-forma
m
Cash Short term maturities Convertible Bond
NP Eurobonds Letters of Credit ANP Trading
Other Bank revolver facility Gross funds available
651 (228) (36) - (210) 350 527
(264) 228 36 - - - -
(70) - - - 50 - (20)
- - - (95)- - (95)
158 - - - - - 158
475 - - (95)(160) 350 570
Matures October 2004 may be renegotiated in
2003
Gross available funds - 570m
27
Conclusions

• Portfolio business model mitigates US and UK
  merchant downcycles
• Liquidity, cash flow and balance sheet underpin
  performance and prospects
• On track to deliver EPS of 9 11p for 2003

28
International PowerInterim Results
6 Months to 30 June 2003